So this Recession...

[Emperor of Graal]

So the recession started in 2008 and we still haven't got rid of it...
Your thoughts and discussions

[LittleGrizzly]

you'll probably have to discuss this in the backroom... no politics or religion in the frontroom...

is it officially a recession yet ? its not one until we have 2 qauters of negative growth... not sure we have had the second qauter yet...

Its good for house prices... they needed to come down... unfortunate for people who just bought houses though...

Im a student and my mum works for the goverment so im pretty recession immune... have a friend whose job was at risk... but he looks fairly safe for a few months at least....

[Hooahguy]

backroom

[Don Corleone]

The U.S. recession began in December of 2007. It's an unfortunate aspect of recessions that you cannot technically be in one until you already have for 9 months, as to qualify, it requires 3 successive quarters of weak growth or decline. By the time you qualify, you've already been there for 9 months, minimum.

[Vladimir]

The U.S. recession began in December of 2007. It's an unfortunate aspect of recessions that you cannot technically be in one until you already have for 9 months, as to qualify, it requires 3 successive quarters of weak growth or decline. By the time you qualify, you've already been there for 9 months, minimum.

It began in 2008. A recession is defined by two consecutive quarters of negative (GDP?) growth.

[Don Corleone]

Sorry, on NPR this morning, they said we'd been in recession for 13 months. As for contraction, and over 2 quarters, you're correct, I was mistaken.

[LittleGrizzly]

Im not sure we have started ours in britian... or we may have just started it... unless i have the wrong end of the stick somewhere...

[Vladimir]

Sorry, on NPR this morning, they said we'd been in recession for 13 months. As for contraction, and over 2 quarters, you're correct, I was mistaken.

That's what you get for listening to NPR .

[KukriKhan]

So the recession started in 2008 and we still haven't got rid of it...
Your thoughts and discussions

Thoughts (US version):
1) If you've been part of the "buy now, leverage your assets, 'flip' a couple houses, pay later" crowd, you might be OK after a little pain. Help is probably on the way from the Government/taxpayers.

2) If you've been part of the "buy what you can reasonably expect to afford, with today's money", you'll be OK, too - except you'll get no bailout, and your taxes are going up to pay for #1.

3) If you've got spare money laying about, now until about June would be a good time to snatch up some good deals on foreclosed real estate and repo'd vehicles.

4) If you're an off-the-grid survivalist, or want to become one: buy guns, gold, and a years worth of canned goods, to prepare for next year's Greatest Depression Ever/Armeggedon.

Discussion: I still don't know what the gov't is gonna do, exactly - except that I'm certain it's gonna cost me, with little in the way of personal enrichment. I hope to keep my current job through this 'crisis', and meanwhile, get trained/educated/qualified for a next career. It's clear that retirement-at-55 was a pipe-dream; retirement at 62 is highly doubtful; working into my 70's seems pretty likely.

Unless my original retirement plan (match 6 numbers with the Lotto) works out.

[CountArach]

The IMF said Australia might avoid it. Other research shows otherwise though.

My Dad is currently looking for a job after the company he has worked for for 25 years was sold. They decided to trim management and so he took his reundancy pay and left. I don't know what the odds of him finding anything close to what he wants in this market are, but I sure hope he does.

[Ice]

Im not sure we have started ours in britian... or we may have just started it... unless i have the wrong end of the stick somewhere...

Wrong end of the stick

[Megas Methuselah]

Why is Saskatchewan doing relatively well, though?

[KukriKhan]

Saskatchewan (like Nebraska, down here) is mostly agricultural, which hasn't felt the effects of dried up credit and tight money, yet (that might change later this year). Your bigger cities like Regina and Saskatoon might be hurting a bit more, or at least feeling the crunch.

Agri-businesses which rely on Springtime loans for predicted Autumn crop yields at harvest might see a change in financiers' willingness to put out capital; not because it's a bad bet, but because they fear their other investments (notably in real estate and government securities) might tank, so they hang on to their money.

Let's hope the lenders keep their courage and keep investing in agri-product, otherwise farmers will suffer, quit, and food shortages start. Nobody wants that snowball to go rolling downhill.

[Hooahguy]

just to interject, i really hate all these bailouts.
where is the money coming from? WHERE?!

[KukriKhan]

just to interject, i really hate all these bailouts.
where is the money coming from? WHERE?!

Short answer: China.

These days, they are the largest buyer of our (US) I.O.U.'s, which will get redeemed in 2, 10, 20 and 30 years by future u.s. taxpayer payments.

Your entire working life will be spent paying off those loans.

But cheer up: the way this thing is getting structured, you'll "own" 1 three-millionth percent of Insurance Companies, Auto Companies, Banks, Porno Companies, and whatever other companies get the bailouts.

[drone]

just to interject, i really hate all these bailouts.
where is the money coming from? WHERE?!

The better question is: where is the money going?

No one really knows, since Congress failed in setting up accounting checks and restrictions on the TARP money.

[Ice]

Short answer: China.

These days, they are the largest buyer of our (US) I.O.U.'s, which will get redeemed in 2, 10, 20 and 30 years by future u.s. taxpayer payments.

Your entire working life will be spent paying off those loans.

But cheer up: the way this thing is getting structured, you'll "own" 1 three-millionth percent of Insurance Companies, Auto Companies, Banks, Porno Companies, and whatever other companies get the bailouts.

Haha, I wish it was coming from China...

It's a little known secret to most people that the Federal Reserve is actually printing money out of thin air to pay for many of the loans it is giving to banks. Now, this is actually productive in a deflationary environment as more money helps fight deflation, but what happens when the economy jump starts again? Who knows...

[seireikhaan]

Haha, I wish it was coming from China...

It's a little known secret to most people that the Federal Reserve is actually printing money out of thin air to pay for many of the loans it is giving to banks. Now, this is actually productive in a deflationary environment as more money helps fight deflation, but what happens when the economy jump starts again? Who knows...

AMEN. THANK YOU.

The staggering number of people I see on the news who seem to have no comprehension of this fact is mind boggling. Its not as though money is an actually worthwhile object. Its just something we say has value. Even if we were still on a gold standard, it'd be the same. After all, its just giving a set value to a thing(money) by using the value that we give to a different thing(gold/silver-aka money). The US people don't pay off debt, per se. Nor is the US "robbing the taxpayer" to fund such efforts. The ONLY threat that such a massive debt would EVER pose to a United States economy would be if we were to have to pay it all of at once, which we WON'T. As long as the money goes into the economy wisely(not guaranteed, of course) and the US economy goes back to a healthy 2% growth rate, US debt become a moot point because of our utterly massive base GDP.

[Xiahou]

It's a little known secret to most people that the Federal Reserve is actually printing money out of thin air to pay for many of the loans it is giving to banks. Now, this is actually productive in a deflationary environment as more money helps fight deflation, but what happens when the economy jump starts again? Who knows...

I'm sure I'm missing something here, but isn't deflation to be expected in a recession and even desirable to an extent? Certainly beats a recession with inflation, which I swear is what they're trying for.

[KukriKhan]

The Fed always prints money out of thin air, since 1971.

The american people back that money up - or have so far. Their representatives authorize the issuance of bonds and securities. Those papers get sold worldwide, to back the Fed paper with the promise that us citizens will work in the future to redeem those promises to pay.

China is the biggest single buyer of those bonds and securities (and a hefty amount of simple Federal Reserve Notes, the paper bills in your wallet), followed by Saudi Arabia, the UAE, and India. Europe (taken as a whole) was in second place, but they've recently been unloading their american paper.

[seireikhaan]

I'm sure I'm missing something here, but isn't deflation to be expected in a recession and even desirable to an extent? Certainly beats a recession with inflation, which I swear is what they're trying for.

Deflation is pretty much undesirable, regardless of the state of the economy. A recession with inflation, if its in the usual target realm of inflation, is basically just a recession. A recession with deflation threatens to prolong the recession.(see Japan)

[Ice]

AMEN. THANK YOU.

The staggering number of people I see on the news who seem to have no comprehension of this fact is mind boggling. Its not as though money is an actually worthwhile object. Its just something we say has value. Even if we were still on a gold standard, it'd be the same. After all, its just giving a set value to a thing(money) by using the value that we give to a different thing(gold/silver-aka money). The US people don't pay off debt, per se. Nor is the US "robbing the taxpayer" to fund such efforts. The ONLY threat that such a massive debt would EVER pose to a United States economy would be if we were to have to pay it all of at once, which we WON'T. As long as the money goes into the economy wisely(not guaranteed, of course) and the US economy goes back to a healthy 2% growth rate, US debt become a moot point because of our utterly massive base GDP.

A large debt can erode the value of the dollar and cause massive inflation in the long run. I'd agree that one of the key to keeping inflation under control (within a healthy 1-2%) is keeping our a debt a constant percentage of GDP or less. Massive debt would eventually cause very serious problems.

I wasn't really referring to debt though. What the Fed is doing in some cases is simply lending banks money, by adding new money into our monetary system. They aren't using existing money. I probably should have been more clear.

I'm sure I'm missing something here, but isn't deflation to be expected in a recession and even desirable to an extent? Certainly beats a recession with inflation, which I swear is what they're trying for.

"Deflation is a central banker's worst nightmare" - Econ 351 Professor

The reason deflation is so bad is because it causes prices to fall. When prices to fall, businesses make less money. To compensate they lay off workers. Consumers refuse to buy products, because what's the point? I mean, in a deflationary environment, would it make sense to hold your money in a bank account gaining interest or a make a purchase when prices are falling? This causes prices to fall even more, creating more layoffs. It's quite nasty.

Stagflation (Inflation/Low GDP growth) is bad, but not as bad. Deflation is what crippled this country during the great depression.

The Fed always prints money out of thin air, since 1971.

The american people back that money up - or have so far. Their representatives authorize the issuance of bonds and securities. Those papers get sold worldwide, to back the Fed paper with the promise that us citizens will work in the future to redeem those promises to pay.

China is the biggest single buyer of those bonds and securities (and a hefty amount of simple Federal Reserve Notes, the paper bills in your wallet), followed by Saudi Arabia, the UAE, and India. Europe (taken as a whole) was in second place, but they've recently been unloading their american paper.

Like I told Khaan, the Fed isn't even issuing bonds when giving money for some of these loans. They are simply expanding the money supply by printing more money. I'm sure everyone remembers what happened to Germany after WWI. This is in spark contrast to their usual method of buying US securities from banks to increase the money supply.

[KukriKhan]

I see. When you write "The Fed", you don't mean just the Federal Reserve, you include the Treasury Department (who actually issues bonds and securities in the name of the american people) and the various and sundry congressional commitees who authorize those debts.

Anyway, I was just trying to answer hooahguy's question:

... where is the money coming from? WHERE?!

And you're right: it comes from printing presses controlled by the Federal Reserve.

I just took a step further, and observed that the biggest buyers of the bonds and securities that back that printing-press money, are non-american speculators.

It wasn't always that way; growing up in the stone-age of the 50's-60's, bonds were held primarily by americans. National debt? Worrisome, a little. But in the end, who did "we" owe? Ourselves!

That's no longer the case. Now we owe someone else. As seireikhaan points out, we'd only be in trouble if everything came due the same day - which assumes that those bond-holders would play by the agreed rules. A 20-year bond won't be presented for payment until 20 years have passed.

But, has it never happened that a bond-holder, in his own distress, presented his bonds for early redemption, even at a loss of face-value of 50-80% and eschewing interest?

I submit that it happens all the time on an individual level, and has happened on a nation-to-nation level too. What if China or SA or UAE, holding trillions of us paper (on redemption), presents that paper for early redemption because their people are starving due to some natural disaster (say), and they need cash to feed them?

Could we cover even the nut, much less the vig?

Far-fetched? Maybe.

Hope for the best. Prepare for the worst. Which US State will we give up to satisfy an early-call debt? Cuz, in the end, all we really have is land, people who will work, and trust in our word.

[Banquo's Ghost]

I submit that it happens all the time on an individual level, and has happened on a nation-to-nation level too. What if China or SA or UAE, holding trillions of us paper (on redemption), presents that paper for early redemption because their people are starving due to some natural disaster (say), and they need cash to feed them?

Could we cover even the nut, much less the vig?

Far-fetched? Maybe.

Hope for the best. Prepare for the worst. Which US State will we give up to satisfy an early-call debt? Cuz, in the end, all we really have is land, people who will work, and trust in our word.

I believe that China holds around 10% of US debt. Whereas this is a sizeable amount, other countries hold more as a group.

The difference between an individual demand and a national one is, of course, scale. If the United States defaulted on a debt as described, the resulting financial cataclysm would engulf China (and us all) to the extent that such an early call on bonds would be unthinkable to them.

I think I am right in saying that China is keen to buy US bonds because she needs her currency linked closely to the dollar, rather than too free floating. As we see from this recession, everyone needs the United States to be strong economically, and right soon. That may not last forever, but most countries interested in continued eating would be keen on any decline happening very gradually, as it was before the bankers decided to go mad.

BTW, if you lot think you have it bad, consider Biffo's Paradise: it's predicted that Ireland is likely to see the economy contract by 10% this year and close to 18% unemployment.

[Vladimir]

I'm going to invest in potato futures.

[Fragony]

3.8% down, this is not a recession it's meltdown

[Ice]

I see. When you write "The Fed", you don't mean just the Federal Reserve, you include the Treasury Department (who actually issues bonds and securities in the name of the american people) and the various and sundry congressional commitees who authorize those debts.

Anyway, I was just trying to answer hooahguy's question:



And you're right: it comes from printing presses controlled by the Federal Reserve.

I just took a step further, and observed that the biggest buyers of the bonds and securities that back that printing-press money, are non-american speculators.

I misspoke. I was referring to the Federal Reserve when I said the "Fed". I forgot who actually issued the new securities.

[KukriKhan]

Best line I've heard all week:

"This 'stimulus plan' is like curing a hangover, by buying a distillery. On MasterCard."

[Vladimir]

Best line I've heard all week:

"This 'stimulus plan' is like curing a hangover, by buying a distillery. On MasterCard."

Remember that the government uses Citibank cards now.

[Lemur]

Remember that the government uses Citibank cards now.

What, like CitiBank doesn't issue MasterCards? Here you go:

Now go spend us out of this recession! Quickly!